Thursday, March 13th, 2008

We are in new times! The Fed announced yesterday, March 11th , the Term Securities Lending Facility (TSLF). This is an innovative tool for these interesting times. In the past, raising the Fed funds rate was the tool to heat up or cool down the economy. Bernanke is applying his creativity. The TSLF is aimed at mortgage backed securities that have been staying on bank balance sheets and slowing the normal flow of credit. The intention of this new tool is to inspire more lending and borrowing. You can read more in this Business Week article. Essentially the Fed is to lend up to $200 billion to banks in an effort to loosen up tight credit markets . The stock market rallied yesterday by 400 points – its biggest gain since July 2002. It declined again today, but stay tuned for more innovative tools from the Fed.

Meanwhile, San Francisco continues to sell many properties at a fast clip. Don’t these buyers know it’s hard to get a loan?